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11.2 million expect worse standard of living in retirement

- 16 per cent expect “significantly” worse standard of living in retirement
- Standard of living expectations get worse closer to retirement

May 2010 – A third of all non-retired UK adults (31%) are expecting their standard of living to slightly decline in retirement, whilst only 12% think that it will improve.  Almost six million (16%) people expect to have a significantly worse standard of living, according to new research(1) from retirement specialist MGM Advantage. 

The research indicates that as people approach retirement, the worse they think their standard of living will be.  Indeed, 60% of people aged 45-54 expect their standard of living to decrease as they near retirement, and this rises to 67% for people aged 55-64 years. 

MGM Advantage’s research also reveals major regional differences with the South-East and Eastern regions featuring the highest percentage of people expecting to have a significantly worse standard of living at 23% compared to just 7% of people in the North East. Almost half (46%) of people in the North-East of England expect their standard of living to be slightly worse in retirement. London ranks as the region that has the highest number of people (21%) expecting a better standard of living in living in retirement.  

(Source: MGM Advantage, April 2010)
Despite having much more leisure time at their disposal, only a third of people (32%) anticipate taking more foreign holidays and one in five (21%) expects to dine out more in retirement.

Aston Goodey, Sales and Marketing Director, MGM Advantage comments, “As these results highlight, a huge number of people are genuinely worried that they will have a poorer standard of living when they retire. People who have worked hard all of their lives are now facing the prospect of not having sufficient income to maintain their current lifestyle. They are even expecting to take fewer foreign holidays and dine out less – things that most people look forward to once they have more time on their hands.

“We believe for people approaching retirement to have the best possible chance of maintaining their existing standard of living, they need to take steps to enhance the level of income.  One way to do this is to shop around using the open market option to find the best annuity rate for them. Another way is to select a retirement income product that maintains exposure to the stock markets.  While it does involve some risk, it also has a better chance of generating upside returns, negate the impact of inflation and maintain a comfortable lifestyle.”

MGM Advantage believes that a growing number of people will need to keep more of their assets exposed to the markets - with the appropriate level of tailored protection - and that this will fuel strong growth for the asset backed annuity market.

MGM Advantage recently launched a Flexible Income Annuity which gives customers the potential to receive a greater income than through a fixed level conventional annuity. The new product includes the flexibility to change income levels at different stages of retirement and the potential for growth and therefore the potential to negate the impact of inflation. It also provides a minimum income guarantee and death benefits. 

Product Details – MGM Advantage Flexible Income Annuity

• A lifetime annuity that offers a choice of starting income between 50% and 120% of the income that would be available from a conventional annuity
• The flexibility to vary income at key stages of retirement to meet lifestyle needs
• A choice of market leading actively managed funds from Jupiter, Newton, JP Morgan Asset Management, selected and monitored by Old Broad Street Research (OBSR)
• A choice of passive funds using funds from Vanguard – MGM Advantage is the first provider in the UK to offer Vanguard funds within an annuity wrapper. A cash fund is also available from Insight Investment.
• Enhanced terms for customers with a health impairment
• Because we’re a mutual, membership of the Society and the potential for extra income from member bonuses, without the need to invest in a traditional with-profits fund
• The usual mortality cross-subsidy benefits offered by annuities but not possible with income drawdown
• Income fixed for five year periods so people can plan their finances more easily
• Automatic five-year income reviews, but also the option for customers to make changes to income levels and investment choices at any time if required
• A Minimum Income Guarantee from day one
• The option to move to a fixed income basis or to another provider at any time
• Death benefits and all the other features you’d expect from a conventional lifetime annuity.
• The Flexible Income Annuity is sold through independent financial advisers

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Notes to editors
1 Research conducted for MGM Advantage of 1,487 UK non retired people between 27.03.10 and 29.03.10.

For further information
Citigate Dewe Rogerson
Jo Skinner                               020 7282 1092
Sophie Woodcock                  020 7282 1072

About MGM Advantage
www.mgmadvantage.com

History:  Based in Sussex, the life assurer opened its doors in 1852 as Marine and General Mutual Life Assurance Society, to fill the poorly-met insurance needs of seafarers and traders.

MGM Advantage is a new name in the UK retirement income market. Formerly known as MGM Assurance, the company rebranded as MGM Advantage, Designs for Retirement in June 2008 and repositioned the company as a retirement income specialist.

Its launch product – an Enhanced Annuity – is designed to provide additional income in retirement for people with any health conditions or a poor medical history and is distributed through independent financial advisers (IFAs) across the UK.

MGM Advantage has recently launched a new and unique asset backed annuity - the Flexible Income Annuity, which will give customers the potential to receive a greater income than through a fixed level conventional annuity. The new product includes the flexibility to change income levels at different stages of retirement and the potential for growth and therefore the potential to negate the impact of inflation. It also provides a minimum income guarantee and death benefits. 

MGM Advantage is a mutual society owned by its members, and manages assets in excess of £1.4 billion. MGM Advantage’s commitment to customer satisfaction is backed up by an industry-leading customer charter, which promises high quality service and a £25 no-quibble payment to any customer who hasn’t received the level of service they expected.
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MGM Advantage Designs for Retirement, MGM Advantage and the MGM Assurance logos are Trade Marks of Marine and General Mutual Life Assurance Society.